US and EU Reach Consensus on Stablecoin Regulations Amid Differing Objectives, Fueling Regulatory Friction

Global Stablecoin Regulation: US and Europe Move Toward Similar Policies

A recent analysis from Sweden's central bank highlights a growing trend: despite differences in legal systems, both the United States and Europe are increasingly adopting similar regulatory strategies for stablecoins. The Riksbank’s report points to three main areas of focus: access to central bank settlement networks, the use of central bank reserves as backing, and liquidity support for stablecoin issuers. Although regulations technically allow stablecoin issuers to use central bank reserves in both regions, practical limitations persist. For example, the European Central Bank (ECB) only permits non-bank payment providers to hold central bank funds for transaction purposes, not as collateral for stablecoins.

Euro-Pegged Stablecoins Gain Traction in Europe

Driven by the Markets in Crypto-Assets (MiCA) regulation, euro-linked stablecoins are seeing increased adoption across Europe. Deutsche Börse, a major financial institution, recently revealed plans to incorporate the EURAU stablecoin—issued by AllUnity—into its systems. This follows earlier collaborations with Circle’s EURC and Societe Generale-Forge’s EURCV. These initiatives are part of a broader effort to connect traditional finance with the digital asset ecosystem. Stephanie Eckermann of Deutsche Börse emphasized the importance of creating a smooth transition between established financial markets and the emerging world of digital assets. While these integrations support MiCA’s objectives to modernize European markets and improve liquidity, the Riksbank notes that stablecoin usage in Europe remains relatively modest.

Comparing Regulatory Approaches: US vs. Europe

The Riksbank’s findings reveal that both the US and Europe are implementing comparable regulatory measures. In the United States, the proposed GENIUS Act seeks to broaden the range of assets backing stablecoins to reinforce the dollar’s global role. Meanwhile, Europe’s MiCA framework enforces stricter rules to safeguard monetary sovereignty. Despite these differences, both regions limit stablecoin issuers’ direct access to central bank settlement systems. The ECB, for instance, has opted not to allow stablecoins to use central bank reserves as collateral, even though MiCA technically permits it. This highlights a gap between regulatory intentions and real-world application, as demonstrated by the ECB’s recent decision to let non-bank payment providers maintain limited central bank accounts solely for payment processing.

Potential Risks and Regulatory Responses

The expansion of stablecoins brings new risks to the financial system. The Riksbank cautions that widespread stablecoin use could divert deposits away from commercial banks, potentially restricting credit availability and increasing borrowing costs for consumers and businesses. These risks are heightened by the absence of deposit insurance for stablecoins and their dependence on private liquidity arrangements. Additional concerns include the possibility of rapid asset sell-offs and inconsistent redemption processes, which complicate regulatory oversight. In response, the US Federal Reserve has proposed new rules that would introduce non-interest-bearing accounts with strict limits, aiming to maintain firm control over liquidity access.

The Road Ahead: Toward Greater Policy Alignment

Looking forward, the Riksbank expects that regulatory policies will become more closely aligned as stablecoin adoption grows. Developments such as Deutsche Börse’s integration of EURAU and advancements in cross-border payment technologies indicate a shift toward more regulated digital finance. However, the report warns that inconsistent regulatory approaches across jurisdictions could hinder the creation of a unified global framework. For now, the EU’s cautious MiCA policy stands in contrast to the US’s more expansive GENIUS Act, but the practical constraints in both regions suggest a gradual move toward regulatory convergence.